Midterm 2 Flashcards
What are the factors of production?
Land, labor, materials, capital, entrepreneurship, knowledge
Production
creation of goods
Production Management
all the activities managers engage in to help firms create goods
What activities does operations management include?
Inventory management, quality control, production scheduling, follow up services
What is the object of operations management?
Provide high quality goods/services in response to customer demand
Production Process
Inputs, production control, outputs, (factors of production, planning/scheduling, goods/services)
Process Manufacturing
physically/chemically changing materials
Continuous Process
long production runs, turns out finished goods over time
Intermittent Process
short production runs, producer adjust machines frequently to make new products,
Continuous vs Intermittent
C: efficient, not marketable due to less variation of products,
I: marketable, less efficient
CAD
Computer-Aided Design (computer design products)
CAM
Computer Aided Manufacturing (computers manufacture products)
CIM
Combination of CAD and CAM, Computer Integrated Manufacturing
What are the benefits of using technology in production?
Long production run, lower labor costs, reduces error, efficient, changes are made quickly, cheaper in the long run
Mass Customization
tailoring products to meet needs of a large number of individual customers
Facility Layout
physical arrangement of resources, including people, to most efficiently produce goods/services,
Assembly Line
workers do only a few tasks at a time
Modular Organization
teams produce more complex units of goods
Fixed Position
workers congregate around product (airplanes)
What is the ideal production layout?
one that results in reduced costs, greater efficiencies, shorter interval from order to delivery, higher level of predictability
What is Purchasing?
function that searches for high quality material resources, finds best suppliers, negotiates price for goods/services
JIT
Just-In-Time; supplies are delivered just in time to go on assembly line to complete orders, minimum inventory
Quality Control
consistently producing what customers want while reducing errors before and after delivery
Six Sigma Quality
quality measure that allows only 3.4 defects per million opportunities
PERT
Program Evaluation & Review Technique; method for analyzing tasks involved in completing a given project and estimating time needed
Critical Path
sequence of tasks that takes longest to complete; where to focus energy
GANTT
bar graph of current projects and completion status
Lean Manufacturing
using fewer resources compared to mass production
Flexible Manufacturing
machines do multiple tasks to produce various products
Interfirm Operations Management
create relationships with suppliers and work with companies to produce and ship goods
What is Accounting?
concepts/stories represented by numbers
Accounting Role
recording, classifying, summarizing, interpreting of financial events and transactions
Who is interested in Accounting details?
Employees, owners, creditors, unions, investors, government
What is the Accounting System?
1) Accounting documents
2) Processing
3) Financial Statements
Managerial Accounting
info/analysis to managers within organization
Financial Accounting
info/analysis for outside organizations
Annual Report
yearly statement of financial condition, progress, and expectations of firm
Accounting Equation
Assets = Liabilities + Owner Equity
Balance Sheet
snapshot in time of company financials, used to see if firm has enough resources to meet obligations (debt)
Income Statement
transactions over a specific time period
Cash Flow Statement
measure of strength, profitability, and provides an outlook on future of firm, how much cash is available for use in a given time
Sales
Revenue = (units sold)(price), minus expenses
How does the balance sheet explain net worth?
analyzes the value of company’s assets compared to liabilities
Net Worth
shows how much a business is actually worth to its owners
Ratio Analysis
compares company’s performance to financial objectives and performance to other firms
Liquidity Ratios
measures a company’s ability to turn assets into cash to pay short-term debt
Leverage Ratios
measure the degree to which a firm relies on borrowed funds, evaluates a firm’s debt
Activity Ratios
measure how effectively management is turning over inventory
Auditing
reviewing/evaluating information used to prepare a company’s financial statements
Tax Accounting
trained in tax law and responsible for preparing tax returns and developing tax strategies
COGS Formula
Purchase Price + Freight Charges + Storage Costs
Operating Cycle
Cash, Production, Inventory, Sales
Business Activites
Operating, Investing, Financing
Sources of Money
Debt and Equity Financing
Debt Financing
funds raised through various forms of borrowing that must be repaid (banks or bonds)
Equity Financing
take on new owners/stockholders
Bonds
long-term loan
Primary Market
firms sell bonds/stocks for the first time
Secondary Market
owners trade perviously issued bonds/stocks
Owner’s Rights
give firm money, own piece of firm, share risk and reward
Book Value
Owner’s Equity/Number of Shares
Earnings Per Share
Net Income/Number of Shares
Dividend
cash payment to owners from profit
Yield
Dividend/Price
Current Ratio
Current Assets/Current Liabilities
Quick Ratio
Current Assets - Inventory
/Current Liabilities
Finance
function of business that acquires funds for firms and manages them within firm
Financial Planning
Short-term & long-term forecasting, budgets, establish financial controls
Short-Term Forecasting
predicts revenues, costs, expenses for 1 year or less
Long-Term Forecasting
predicts revenues, costs, expenses longer than a year
Budget
expectations for revenue and allocation of resources
Operational Funds
managing daily needs, acquiring needed inventory, controlling credit operations, making capital expenditures
Trade Credit
practice of buying goods/services now and paying later
What are the benefits to trade credit?
short-term funding, least expensive, most convenient
Secured Loan
backed by collateral, often property
Factoring
selling accounts receivable by cash
Commercial Paper
funds for only a few months, unsecured
Leverage
raising funds through borrowing to increase a firm’s rate of return
Pros and Cons of Debt Financing:
don’t distribute wealth, receive more wealth, risk of high interest rates,
Pros and Cons of Equity Financing:
don’t owe any money, high risk, high reward, own only a portion of company
Debt to Equity Ratio
Total Debt
/Total Owner’s Equity
What is the purpose of D/E ratio?
measures amount owned to owed, shows the ability to cover debts, used to compare with other firms
What does a high D/E Ratio indicate?
indicates a firm has been aggressive in financial growth, can end in volatile earnings
Falling Dollar Value
amount of goods/services you can but with $1 decreases, increases exports
Rising Dollar Value
amount of goods/services you can but with $1 increases, decreases exports
What causes the dollar to rise and fall in value?
due to the position of US economy relative to other global economies
What is the Feds dual mandate?
maintain max employment while keeping prices stable
Inflation
too much money chasing too few goods
Deflation
too little money chasing too much goods
Money Supply
amount of money Fed makes available
Reserve Requirement
percent of money that has to be physically kept in banks
Open-Market Operations
buying/selling of government bonds
Discount Rate
interest rate Fed charges for loans to banks
Check-Clearing
process of delivering checks between paying and receiving banks
Commercial Banks
profit-seeking organization, receives deposits, uses funds to make loans
Demand Deposit
Checking account, money available on demand
Savings and Loan Association
financial institution, provides home mortgage loans, promotes consumer thrift
Credit Unions
non-profit, member owned financial cooperatives, short term loans
Nonbank
financial organizations that don’t accept deposits, offer life insurance and pension funds
FDIC
Federal Deposit insurance Corporation; independent agency that insures bank deposits
Bitcoin
fully digital currency with no government involvement
Crypto Currency
Ledger - Trust + Cryptography
